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Angela is a tenant of Bruce.On July 1,Angela paid Bruce $3,600 for 3 months of rent.On July 31,Bruce's adjusting entries will include a debit to:


A) Deferred Revenue for $3,600 and a credit to Rent Revenue for $3,600.
B) Cash for $3,600 and a credit to Deferred Revenue for $3,600.
C) Deferred Revenue for $1,200 and a credit to Rent Revenue for $1,200.
D) Rent Expense for $1,200 and a credit to Prepaid Rent for $1,200.

E) None of the above
F) A) and B)

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At the end of the accounting period:


A) all accounts are closed.
B) temporary accounts are closed;permanent accounts are not.
C) permanent accounts are closed;temporary accounts are not.
D) only accounts with a credit balance are closed.

E) A) and D)
F) B) and C)

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Before the closing entries are prepared,the Retained Earnings balance in the adjusted trial balance is equal to the balance of that account:


A) at the beginning of the period.
B) after adding revenues and subtracting expenses but before subtracting dividends.
C) at the end of the period.
D) at the beginning of the next period.

E) All of the above
F) A) and B)

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A company started the year with $3,750 of supplies on hand.During the year the company purchased additional supplies of $2,000 and recorded them as an increase to the supplies asset.At the end of the year the company determined that only $750 of supplies are still on hand.What is the adjusting journal entry to be made at the end of the period?


A) Debit Supplies Expense and credit Supplies for $5,000
B) Debit Supplies and credit Supplies Expense for $750
C) Debit Supplies Expense and credit Supplies for $3,000
D) Debit Supplies and credit Supplies Expense for $2,500

E) B) and C)
F) A) and B)

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Adjusting entries are typically prepared:


A) at the beginning of the accounting period.
B) at the end of the accounting period.
C) on a daily basis.
D) on a weekly basis.

E) C) and D)
F) A) and C)

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When recording an adjustment for the use of equipment during the current accounting period,which two accounts are affected?


A) Accumulated Depreciation and Depreciation Expense
B) Equipment and Depreciation Expense
C) Accumulated Depreciation and Equipment
D) Revenue and Equipment

E) A) and C)
F) All of the above

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A company reports Equipment on its classified balance sheet.The balance of the Accumulated Depreciation account appears on a classified balance sheet as:


A) an addition to arrive at the amount of Equipment,Net.
B) a subtraction to arrive at the amount of Equipment,Net.
C) part of the Total Liabilities section.
D) a subtraction in the Total Liabilities section.

E) B) and C)
F) None of the above

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Which of the following statements about the Retained Earnings account is correct?


A) Retained Earnings is a permanent account;income statement accounts are temporary.
B) Retained Earnings and income statement accounts are all temporary accounts.
C) Retained Earnings and income statement accounts are all permanent accounts.
D) Retained Earnings is a temporary account,while income statement accounts are permanent accounts.

E) B) and C)
F) A) and D)

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Which of the following statements about the Dividends account is correct?


A) It has a credit balance.
B) It is an expense.
C) It reduces Retained Earnings.
D) It is an account that is reported only on the income statement.

E) A) and B)
F) B) and C)

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The balance in retained earnings prior to the closing process equals:


A) the balance at the end of the previous accounting period.
B) beginning retained earnings plus the current period's net income.
C) beginning retained earnings plus the current period's net income minus the current period's dividends declared.
D) the cash balance on the balance sheet.

E) A) and B)
F) B) and C)

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What is the purpose of the adjusted trial balance?


A) To ensure that all transactions have been recorded.
B) To ensure that total debits equal total credits after the adjustments have been recorded.
C) To ensure that the correct accounts have been adjusted.
D) To ensure that there have been no errors in recording the transactions.

E) B) and D)
F) B) and C)

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The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to:


A) Interest Payable and credit to Interest Expense.
B) Interest Expense and credit to Interest Payable.
C) Interest Receivable and credit to Interest Receivable.
D) Interest Expense and credit to Notes Payable.

E) C) and D)
F) All of the above

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Which of the following is a correct statement about the nature of equipment?


A) While equipment is an asset,its use is recorded as an expense.
B) While equipment is an asset,its use is recorded as a liability.
C) While equipment is an asset,its use is recorded as affects Common Stock.
D) Equipment and its use both affect liabilities.

E) B) and C)
F) All of the above

Correct Answer

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Which account below is a permanent account?


A) Service Revenue
B) Depreciation Expense
C) Dividends
D) Deferred Revenue

E) A) and B)
F) None of the above

Correct Answer

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The accrual adjustment recorded to adjust for revenues earned but not yet collected will cause:


A) liabilities to increase.
B) assets to decrease.
C) assets to increase.
D) liabilities to decrease.

E) B) and C)
F) A) and B)

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On December 31,2018,the balance in Retained Earnings is $40,000.On December 31,2019,the balance in Retained Earnings is $38,200.During 2019,dividends of $8,000 were declared and paid.What is the amount of net income for 2019?


A) $9,800
B) $6,200
C) $1,800
D) ($1,800)

E) None of the above
F) B) and C)

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For the current year,the Sales Revenue account of Hamilton,Inc.has a credit balance of $532,440 at year-end.After the closing entries have been posted,the account will:


A) have a debit balance of $532,440.
B) have a zero balance.
C) still have a credit balance of $532,440.
D) be removed entirely from the general ledger.

E) None of the above
F) A) and B)

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After preparing adjusting entries,the equality of recorded debits and credits is checked by preparing a(n) :


A) post-closing trial balance.
B) adjusted trial balance.
C) income statement.
D) balance sheet.

E) B) and C)
F) A) and C)

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Permanent accounts:


A) are not permitted under GAAP.
B) have their balances zeroed-out at the end of each accounting year.
C) do not have their year-end balances carried into the next year.
D) are Balance Sheet accounts.

E) A) and D)
F) B) and C)

Correct Answer

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Closing journal entries:


A) transfer revenues and expenses to asset and liability accounts.
B) transfer assets and liabilities to Retained Earnings.
C) transfer net income (or loss) and Dividends to Retained Earnings.
D) close permanent and temporary accounts.

E) B) and C)
F) None of the above

Correct Answer

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